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Jim Paulsen, chief investment officer of Wells Capital Management, is a "glass is half-full" kind of guy, known as Sunny Jim by some on Wall Street. But he has generally been a forecaster worth listening to, especially when so many so-called market pundits let their political ideology and saturnine predispositions cloud their judgment.

Take the looming "fiscal cliff" that has so many investors on tenterhooks. In a report last week, he declared it a "molehill." Sure, there would be some fiscal contraction next year if the nation were to plunge over it, but not nearly enough to cause a recession. In any case, he predicts, agreement will eventually be reached to phase in budget cuts over many years. And offsetting much of the fiscal drag from any spending reductions next year will be a host of factors, including "rapid money growth, record-low mortgage rates, lower gasoline prices, a weaker dollar and a lowered inflation rate," he adds.

He's optimistic mostly because the U.S. economy is now, as he puts it, "gearing" again, with the recovery from the Great Recession broadening and therefore less susceptible to shocks or reversals. He goes down a checklist of favorable economic developments. Over the past year, job growth has picked up, and unemployment has fallen by the largest amounts during the entire recovery. Consumer confidence, after waffling during much of the recovery, recently hit a four-year high. U.S. bank lending has reversed its decline and since mid-2011 has been growing. Household net worth is now just 7% below its all-time high after being down some 25% in 2009. Housing starts and home prices are finally ascending. State tax collections recently hit a record high. Low interest rates have helped drive down household debt from a record high 19% of disposable income in 2007 to a near-record low of 16%.

Likewise, he's heartened by signs that the pre-eminent overseas market, China, seems to be reviving from its recent funk. He even sees some positive developments in Europe that will transform the euro zone from a severe risk to global economic growth to a mere chronic problem. Thankfully, European authorities finally have somewhat abandoned the Calvinist policies of punitive fiscal austerity and extreme monetary tightness that threatened to strangle the Continent.

As a result, cliff or no cliff, Paulsen sees U.S. gross domestic product growth in 2013 of 3%, some 50% higher than consensus forecasts. Moreover, he thinks that the S&P 500 will climb for the fifth year in a row. The higher prices will come, as they have in 2012, more from an increase in price-earnings valuations than from actual earnings growth.

So, just maybe, things aren't as dire as they seem as we lurch into the holiday season. That would be the nicest present of all for U.S. investors.

JUST AS HEATED as last week's budget negotiations was the partisan bickering over U.N. Ambassador Susan Rice's fitness to replace Hillary Clinton as secretary of state.

One of our favorite foreign-policy experts, George Friedman of the private intelligence company Stratfor, weighed in on the matter with his usual idiosyncratic insights. First, he thinks that the Benghazi consulate-attack controversy has been blown out of proportion and become an outlet for Republican frustration over the party's poor electoral performance. Not that Friedman is particularly enamored of Rice as Clinton's successor. "She lacks the gravitas for the position that Clinton has in abundance," he argues. "Foreign leaders snap to attention when Clinton enters a room, and she allowed Obama to virtually outsource foreign policy to her. He won't have that luxury now, since his foreign policy bench is so thin."

Some have suggested that Obama select Massachusetts' John Kerry instead, even if the Democrats might lose his seat in the Senate in the process. Friedman, however, contends that Kerry is something of a lightweight, with just superficial knowledge of most foreign-policy issues. "He would require a lot of handlers around him, which could be done, but is not optimal," says Friedman.

He suggests that a smart choice would be the retiring U.S. senator from Indiana, Richard Lugar, who has considerable foreign-policy expertise and respect from foreign leaders, and who has foreign-policy views similar to Obama's. Age -- Lugar is 80 -- might be the only impediment to what would be regarded as an inspired bipartisan gesture, Friedman asserts.

The issue of a new secretary of state comes as the Mideast is, as always, aboil. In Friedman's estimation, Syria's Bashar al-Assad has already fallen. "He's now just another warlord militia leader in Syria, with declining control of some key cities," says Friedman. Iran's dream of a sphere of influence from Afghanistan to the Mediterranean is in shambles with the flare-up of sectarian strife in both Syria and Iraq. And Israel is in no position to bomb Iran, not that it ever was, maintains Friedman, because of political ferment on its borders.